This Part has rules that apply to licensees that are lessors. These rules are aimed at better informing consumers and preventing them from being in unsuitable consumer leases.
Division 2 requires a licensee to give its credit guide to a consumer. The credit guide has information about the licensee and some of the licensee’s obligations under this Act.
Division 3 requires a licensee, before doing particular things (such as entering a consumer lease), to make an assessment as to whether the lease will be unsuitable. To do this, the licensee must make inquiries and verifications about the consumer’s requirements, objectives and financial situation. The licensee must give the consumer a copy of the assessment if requested.
Division 4 prohibits a licensee from entering a consumer lease that is unsuitable for a consumer.
Division 5 prohibits a licensee from entering into, or offering to enter into, a consumer lease for household goods in certain circumstances and imposes requirements on a licensee who makes representations about consumer leases for household goods. It also imposes requirements in relation to recording an assessment that a consumer lease is not unsuitable.
Division 2—Credit guide of lessors
149 Credit guide of lessors
Requirement to give credit guide
(1) A licensee must, as soon as practicable after it becomes apparent to the licensee that it is likely to enter a consumer lease with a consumer who will be the lessee under the lease, give the consumer the licensee’s credit guide in accordance with subsection (2).
Civil penalty: 5,000 penalty units.
(2) The licensee’s credit guide must:
(a) be in writing; and
(b) be in the form (if any) prescribed by the regulations; and
(c) specify the licensee’s name and contact details; and
(d) specify the licensee’s Australian credit licence number; and
(e) give information about the licensee’s procedure for resolving disputes with a consumer, including contact details for a consumer to access:
(i) the licensee’s internal dispute resolution procedure; and
(ii) the AFCA scheme; and
(f) give information about the licensee’s obligations under sections 155 and 156; and
(g) comply with any other requirements prescribed by the regulations.
(3) The regulations may prescribe information that need not be included in the credit guide, despite subsection (2).
Manner of giving credit guide
(4) The licensee must give the consumer the licensee’s credit guide in the manner (if any) prescribed by the regulations.
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
(6) Subsection (5) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
150 Credit guide of lessors who are assignees
Requirement to give credit guide
(1) A licensee must, as soon as practicable after it has been assigned any rights or obligations of a lessor under a consumer lease, give the lessee under the lease the licensee’s credit guide in accordance with subsection (2).
Civil penalty: 5,000 penalty units.
(2) The licensee’s credit guide must:
(a) be in writing; and
(b) be in the form (if any) prescribed by the regulations; and
(c) specify the licensee’s name and contact details; and
(d) specify the licensee’s Australian credit licence number; and
(e) give information about the licensee’s procedure for resolving disputes with a consumer, including contact details for a consumer to access:
(i) the licensee’s internal dispute resolution procedure; and
(ii) the AFCA scheme; and
(f) comply with any other requirements prescribed by the regulations.
(3) The regulations may prescribe information that need not be included in the credit guide, despite subsection (2).
Manner of giving credit guide
(4) The licensee must give the consumer the licensee’s credit guide in the manner (if any) prescribed by the regulations.
Strict liability offence
(5) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
(6) Subsection (5) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
Division 3—Obligation to assess unsuitability
151 Obligation to assess unsuitability
A licensee must not:
(a) enter a consumer lease with a consumer who will be the lessee under the lease; or
(b) make an unconditional representation to a consumer that the licensee considers that the consumer is eligible to enter a consumer lease with the licensee;
on a day (the lease day) unless the licensee has, within 90 days (or other period prescribed by the regulations) before the lease day:
(c) made an assessment that:
(i) is in accordance with section 152; and
(ii) covers a period in which the lease day occurs; and
(d) made the inquiries and verification in accordance with section 153.
Civil penalty: 5,000 penalty units.
152 Assessment of unsuitability of the consumer lease
For the purposes of paragraph 151(c), the licensee must make an assessment that:
(a) specifies the period the assessment covers; and
(b) assesses whether the consumer lease will be unsuitable for the consumer if the lease is entered in that period.
Note: The licensee is not required to make the assessment under this section if the lease is not entered.
153 Reasonable inquiries etc. about the consumer
Requirement to make inquiries and take steps to verify
(1) For the purposes of paragraph 151(d), the licensee must, before making the assessment:
(a) make reasonable inquiries about the consumer’s requirements and objectives in relation to the consumer lease; and
(b) make reasonable inquiries about the consumer’s financial situation; and
(c) take reasonable steps to verify the consumer’s financial situation; and
(d) make any inquiries prescribed by the regulations about any matter prescribed by the regulations; and
(e) take any steps prescribed by the regulations to verify any matter prescribed by the regulations.
Civil penalty: 5,000 penalty units.
(1A) If:
(a) the consumer lease is a consumer lease for household goods; and
(b) the consumer holds (whether alone or jointly with another person) an account with an ADI into which income payable to the consumer is credited;
the licensee must, in verifying the consumer’s financial situation for the purposes of paragraph 151(d), obtain and consider information about each transaction on the account, and the balances of the account, during at least the immediately preceding period of 90 days.
(1B) Subsection (1A) does not limit paragraph (1)(c).
(2) The regulations may prescribe particular inquiries or steps that must be made or taken, or do not need to be made or taken, for the purposes of paragraph (1)(a), (b) or (c).
154 When consumer lease must be assessed as unsuitable
Requirement to assess the lease as unsuitable
(1) The licensee must assess that the consumer lease will be unsuitable for the consumer if the lease will be unsuitable for the consumer under subsection (2).
Note: Even if the lease will not be unsuitable for the consumer under subsection (2), the licensee may still assess that the lease will be unsuitable for other reasons.
Particular circumstances when the lease will be unsuitable
(2) The lease will be unsuitable for the consumer if, at the time of the assessment, it is likely that:
(a) the consumer will be unable to comply with the consumer’s financial obligations under the lease, or could only comply with substantial hardship, if the lease is entered in the period covered by the assessment; or
(b) the lease will not meet the consumer’s requirements or objectives if the lease is entered in the period covered by the assessment; or
(c) if the regulations prescribe circumstances in which a consumer lease is unsuitable—those circumstances will apply to the lease if the lease is entered in the period covered by the assessment.
Civil penalty: 5,000 penalty units.
(3) For the purposes of paragraph (2)(a), it is presumed that, if the consumer could only comply with the consumer’s financial obligations under the lease by selling the consumer’s principal place of residence, the consumer could only comply with those obligations with substantial hardship, unless the contrary is proved.
Information to be used to determine if lease will be unsuitable
(4) For the purposes of determining under subsection (2) whether the lease will be unsuitable, only information that satisfies both of the following paragraphs is to be taken into account:
(a) the information is about the consumer’s financial situation, requirements or objectives, or any other matter prescribed by the regulations under paragraph 153(1)(d) or (e);
(b) at the time of the preliminary assessment:
(i) the licensee had reason to believe that the information was true; or
(ii) the licensee would have had reason to believe that the information was true if the licensee had made the inquiries or verification under section 153.
155 Giving the consumer the assessment
Requirement to give assessment if requested
(1) If, before entering the consumer lease, the consumer requests the licensee for a copy of the assessment, the licensee must give the consumer a written copy of the assessment before entering the lease.
Note: The licensee is not required to give the consumer a copy of the assessment if the lease is not entered.
Civil penalty: 5,000 penalty units.
(2) If, during the period that:
(a) starts on the day (the lease day) the consumer lease is entered; and
(b) ends 7 years after that day;
the consumer requests the licensee for a copy of the assessment, the licensee must give the consumer a written copy of the assessment:
(c) if the request is made within 2 years of the lease day—before the end of 7 business days after the day the licensee receives the request; and
(d) otherwise—before the end of 21 business days after the day the licensee receives the request.
Civil penalty: 5,000 penalty units.
Manner of giving assessment
(3) The licensee must give the consumer the copy of the assessment in the manner (if any) prescribed by the regulations.
No payment for assessment
(4) The licensee must not request or demand payment of an amount for giving the consumer a copy of the assessment.
Civil penalty: 5,000 penalty units.
Strict liability offence
(5) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1), (2) or (4); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
(6) Subsection (5) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
Division 4—Prohibition on entering unsuitable consumer leases
156 Prohibition on entering unsuitable consumer leases
Prohibition on entering unsuitable lease
(1) A licensee must not enter a consumer lease with a consumer who will be the lessee under the lease if the lease is unsuitable for the consumer under subsection (2).
Civil penalty: 5,000 penalty units.
When the lease is unsuitable
(2) The lease is unsuitable for the consumer if, at the time it is entered:
(a) it is likely that the consumer will be unable to comply with the consumer’s financial obligations under the lease, or could only comply with substantial hardship; or
(b) the lease does not meet the consumer’s requirements or objectives; or
(c) if the regulations prescribe circumstances in which a consumer lease is unsuitable—those circumstances apply to the lease.
(3) For the purposes of paragraph (2)(a), it is presumed that, if the consumer could only comply with the consumer’s financial obligations under the lease by selling the consumer’s principal place of residence, the consumer could only comply with those obligations with substantial hardship, unless the contrary is proved.
Information to be used to determine if lease is unsuitable
(4) For the purposes of determining under subsection (2) whether the lease is unsuitable, only information that satisfies both of the following paragraphs is to be taken into account:
(a) the information is about the consumer’s financial situation, requirements or objectives, or any other matter prescribed by the regulations under paragraph 153(1)(d) or (e);
(b) at the time the lease is entered:
(i) the licensee had reason to believe that the information was true; or
(ii) the licensee would have had reason to believe that the information was true if the licensee had made the inquiries or verification under section 153.
Consumer lease not unsuitable under regulations
(5) The regulations may prescribe particular situations in which a consumer lease is taken not to be unsuitable for a consumer, despite subsection (2).
Offence
(6) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 2 years imprisonment.
Division 5—Special rules for consumer leases for household goods
156A Licensee who makes representations about consumer leases for household goods must display and give information
Requirement
(1) If a licensee represents that the licensee enters into, or is able to enter into, consumer leases for household goods with consumers under which the licensee would be the lessor, the licensee must:
(a) display information; and
(b) give information to consumers;
in accordance with any determination made be ASIC under subsection (2).
Civil penalty: 5,000 penalty units.
(2) ASIC may, by legislative instrument, determine one or more of the following matters relating to licensees that make representations described in subsection (1):
(a) the information that the licensees must display;
(b) how the licensees must display the information;
(c) when the licensees must display the information;
(d) the information that the licensees must give to consumers;
(e) how the licensees must give the information to consumers;
(f) when the licensees must give the information to consumers.
Offence
(3) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
156B Licensee must not enter into a consumer lease for household goods if the payments do not meet the prescribed requirements
Requirement
(1) A licensee must not enter into, or offer to enter into, a consumer lease for household goods with a consumer who will be the lessee under the lease if the amount that would be required to be paid under the lease by the lessee would not meet the requirements prescribed by the regulations.
Civil penalty: 5,000 penalty units.
Note: For example, the regulations may provide that the amount of a payment must not exceed a specified percentage of the lessee’s income.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 50 penalty units.
Loss of certain amounts
(3) If the licensee enters into a consumer lease for household goods in contravention of subsection (1), then:
(a) the lessee is not liable (and is taken never to have been liable) to pay any amount under that consumer lease that exceeds the base price of the goods hired under that consumer lease (whether or not the liability is imposed consistently with the National Credit Code); and
(b) the lessee may recover as a debt due to the lessee any amounts paid by the lessee that, in accordance with paragraph (a) of this subsection, the lessee is not liable to pay (or is taken never to have been liable to pay).
156C Written documentation required in relation to the assessment for a consumer lease for household goods
(1) If, in an assessment made for the purposes of paragraph 151(c), the licensee assesses that a consumer lease for household goods is not unsuitable for a consumer, before:
(a) entering into the consumer lease with the consumer; or
(b) making an unconditional representation to the consumer that the licensee considers that the consumer is eligible to enter a consumer lease with the licensee;
the licensee must document in writing and in accordance with any requirements determined by ASIC under subsection (2):
(c) the assessment; and
(d) the inquiries and verification made for the purposes of paragraph 151(d) in relation to that assessment.
Civil penalty: 5,000 penalty units.
(2) ASIC may, by legislative instrument, determine the form in which the matters in paragraphs (1)(c) and (d) are to be documented in writing.
(3) Before making a determination under subsection (2), ASIC must:
(a) consult the Information Commissioner in relation to matters that relate to the privacy functions (within the meaning of the Australian Information Commissioner Act 2010); and
(b) have regard to any submissions made by the Information Commissioner because of that consultation.
Part 3‑5—Credit representatives
Division 1—Introduction
157 Guide to this Part
This Part has rules that apply to credit representatives when they act on behalf of a licensee under Part 3‑1, 3‑2, 3‑3 or 3‑4. These rules are aimed at better informing consumers.
Division 2 requires a credit representative to give its credit guide to a consumer. The credit guide has information about the credit representative.